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On the latest episode of Yahoo Finance’s Trader Talk, host Kenny Polcari sat down with guest Bulleye Investment Group's Adam Johnson to break down the forces driving today’s market volatility. The pair explored how psychology, Federal Reserve policy, and the rise of algorithms contribute to the unpredictable ups and downs of the market.
Johnson pointed out the market’s tendency to overreact to good news, which often triggers fears of inflation and interest rate hikes. “You buy stocks because of earnings growth, not because you think the Fed's going to cut rates,” Johnson said, urging investors to focus on long-term fundamentals instead of speculation.
Polcari echoed this but stressed the importance of caution. “You should understand what the economy is doing around you before you just haphazardly go and start buying stocks,” he advised, noting the impact inflation could have on stock selection and timing.
The conversation also highlighted the role of algorithms in driving erratic market movements. Johnson explained that pre-programmed systems often respond automatically to data, amplifying volatility. Polcari added that fear indicators like the VIX crossing 22 can set off sell programs, leading to further market turbulence. Both agreed that if the 10-year Treasury yield hits 5%, it could spell trouble for stocks, especially if inflation surges or economic growth slows.
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To gain more insights and discover potential investment strategies, tune into the full episode of Trader Talk on Yahoo Finance.
This post was written by Langston Sessoms.